Global Capability Centers: Key Hotspots and India’s Rise as the GCC Capital

Talent Cost within TCO: GCC Hotspots relative to US cities (Base = USA 7-cities avg. = 100)

120

100

80

60

40

20

As per our analysis, the cost of operating a 1,000 member GCC team (i.e., only the human resource cost) in the US cities, which is home to some of the most advanced tech ecosystems in the world, stands at ~USD 120 mn per annum. There are disparities within the US, though, as cities such as San Francisco and Boston have higher talent cost than the above-mentioned average of 7-cities, but others such as Atlanta, Dallas and New Jersey are on the lower side. Outside of the USA, cities in neighboring countries such as Mexico City have been a traditional hotspot for American firms to set-up offshoring units, thereby inflating it’s talent costs significantly. The cost of acquiring talent in Mexico City is comparable to costs prevailing in lesser expensive American cities such as New Jersey and Atlanta. At the other spectrum lies cities in India, where there is abundance of tech talent available and cost of desired talent pool is merely 22-25% of the 7-cities’ average talent cost in the US, thereby rendering India as a highly attractive consideration for multinationals. For instance, cost of talent for a similar 1,000-member GCC team in “India’s Silicon Valley” of Bengaluru is likely to be ~USD 29.5 million, which is only one-fourth the cost likely to be incurred in the United States. In addition to talent cost, the real estate cost of operations (RECO), which includes office rent, CAM charges, fit-outs and facility management, stands at ~USD 15,000 on a per employee basis on average across seven cities of US. The financial and tech capital cities of US and UK, i.e.. New York, London, San Francisco and Boston, command a premium and are considered amongst the most expensive real estate markets, while other cities in the US are cheaper than the 7-cities’ average. Once again, the top-6 metropolitan cities in India turn out to be cheaper by 20-25% on average compared to the average of US cities, thereby rendering Indian cities the cheapest in comparison to all GCC hotspots across the world.

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Real Estate Cost within TCO: GCC Hotspots relative to US cities (Base = USA 7-cities avg. = 100)

140

120

100

80

60

40

20

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Note: the total cost of operation is derived on a per annum basis assuming one full year of operation with a 1000-member team.

GLOBAL CAPABILITY CENTERS: 10

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Key Hotspots and India’s Rise as the GCC Capital